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An overview of all legal levers is provided on the page Optimising taxes; the legal foundations are set out in our guide Crypto Tax Advisor.
How can you save tax and legally avoid crypto tax?
Saving tax and legally avoiding crypto tax is of great interest to many investors. There are several strategies and approaches for minimising the tax burden:
1. Observe the holding period
If cryptocurrencies are held for longer than one year, the gains are tax-free. This rule can be used to realise tax-free gains. Investors should therefore make a point of holding their coins strategically for longer where there is no short-term need for liquidity.
2. Use the exemption threshold
Up to an annual gain of 1,000 euros, profits from trading cryptocurrencies are tax-free. This exemption threshold applies to private investors and should be used to best effect to realise smaller gains tax-free.
3. Offset losses
Realised losses from trading cryptocurrencies can be offset against gains from the same year in order to reduce the tax burden. This loss offsetting is particularly important for lowering taxable income and making use of tax advantages.
4. Plan purchases and sales strategically
Using the FIFO method („first in, first out“) can help to achieve tax advantages. Depending on market movements, it can be advantageous to sell specific coins that are tax-free or show a lower gain. Precise planning and a clear overview of transactions are essential here.
5. Professional advice
A tax advisor specialising in cryptocurrencies can develop individual strategies and ensure that all legal requirements are met. This not only minimises the tax burden but also protects against potential problems with the tax authorities.
Important: All tax optimisation measures must be legal and compliant with German tax law in order to avoid later problems with the tax authorities.
When does crypto tax arise?
In Germany there are various situations in which tax on cryptocurrencies can arise. The tax treatment depends on the type of transaction:
| Situation | Description | Tax treatment |
|---|---|---|
| Sale | Sale of cryptocurrencies for fiat currencies | Gains within one year are taxable |
| Exchange (swaps) | Exchanging one cryptocurrency for another | Treated as a disposal, taxable on a gain within one year |
| Staking | Receiving rewards by staking coins | Income tax on the rewards received |
| Lending | Lending cryptocurrencies in return for interest payments | Interest income is subject to income tax |
| Mining | Mining cryptocurrencies | Income tax on the rewards received |
| NFT trading | Trading in non-fungible tokens | Gains within one year are taxable |
| Futures/margin | Trading futures contracts or with borrowed capital | Gains are subject to capital gains tax |
Conclusion: saving crypto tax, but legally
Tax optimisation with cryptocurrencies offers a number of legal ways to reduce the tax burden. By observing the holding period, using exemption thresholds or offsetting losses, you can achieve considerable savings. Strategic planning of transactions and professional advice are decisive in getting the best out of your investments while complying with all legal requirements.
For individual tax advice on cryptocurrencies, contact me. I will support you in optimising your tax strategy.
More articles on this topic
For the individual implementation of these strategies, our crypto tax advisory service supports you, specialised in Bitcoin, staking, DeFi and NFTs.
Frequently Asked Questions on saving crypto tax
What is the most effective legal strategy against crypto tax?
The one-year period. Anyone holding coins as private assets for longer than one year sells entirely tax-free, regardless of the size of the gain. Every tax plan therefore starts with the question of which holdings are close to the end of the period and whether waiting is worthwhile.
How does loss offsetting work with crypto?
Losses from sales within the one-year period are offset against gains from private disposal transactions: in the same year, carried back to the previous year, or carried forward to future years under Section 10d EStG. The condition is that you declare the losses in your tax return and have them formally determined.
Can I sell coins at a loss and buy them back?
Realising losses and subsequently buying back is generally possible because there is no special blocking period for cryptocurrencies. The repurchase starts a new holding period. Such arrangements should be economically justifiable and cleanly documented in order to avoid discussions with the tax office.
Is a GmbH worthwhile for crypto investments?
Only from larger portfolios and with active trading. In a GmbH the tax-free one-year period does not apply; instead, corporation tax and trade tax apply, totalling around 30 percent on profits. Whether that pays off depends on the holding period, trading frequency and distribution behaviour, and needs to be calculated through.
